Rwandan government to bailout Kinazi Cassava Plant to boost operations

RWANDA – Kinazi Cassava Plant Limited, a cassava flour and starch processing plant in Rwanda is set to receive a bailout from government as an intervention that seeks to turn around its unprofitable business operations.

According to a report by The New Times, the intervention was
informed by government’s assessment of the plant’s operations which revealed
that the firm was operating below capacity.

Among the major constrains identified in the plant, in which the government holds shares , included technical challenges and insufficient equipment.

Other than the government, the
Development Bank of Rwanda and Agaciro Development Fund are also shareholders
in the company.

Soraya Hakuziyaremye, the Minister of
Trade and Industry said that the assessment informed the government to consider
recapitalisation as well as overall business restructuring as part of its
interventions towards making the business profitable.

Other ongoing interventions include
facilitation to standards compliance, research and development and reduction of
production costs among others.

Kinazi was established in 2012 under the
financing of the Development Bank of Rwanda through a US$6.66 million (Rwf6
billion) investment.

At the time, the Ruhango District-based firm
aimed at creating a market for cassava, reducing farmers’ post-harvest losses
as well as add value to the food crop in one of the leading cassava producing
region in the country.

However, over the years, the firm has
been grappling with numerous challenges including low cassava supplies from
farmers to meet its input needs, low quality of cassava from farmers and
limited technical capacity among others.

Emile Nsanzabaganwa, the Chief Executive
Officer at Kinazi, unveiled that the plant has been operating below capacity
with the last three months of 2018 recording an average production capacity of 67%,
as one of the highest in during the year.

The factory has the capacity to produce
30 tonnes of flour per day, equivalent to 7,200 tonnes per year.

However, the challenges in capacity have
persisted despite a rise in cassava production by farmers.

According to data from the Ministry of
Agriculture and Animal Resources, cassava production increased to more than
1.127 million tonnes in 2018 from 1.041 million tonnes in 2017.

The government has embarked on
interventions to boost local firms as a strategy to enable meet demand of the local
market as well as be competitive to enter regional markets in the wake of African
Continental Free Trade Area Agreement implementation.